Canada cheers Obama remarks on U.S. farm subsidies

Wed Feb 25, 2009 1:17pm EST
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OTTAWA (Reuters) - Canada's agriculture minister hailed on Wednesday remarks by U.S. President Barack Obama about ending some U.S. farm subsidies, saying it was one small step moving the world closer to a world trade agreement.

In an address to Congress late Tuesday, Obama called for an end to "direct payments to large agribusinesses that don't need them," an apparent attack on subsidies costing $5.2 billion a year.

"It's in line with what we're asking for at the World Trade Organization ... it's a good right step," Canadian Agriculture Minister Gerry Ritz told reporters in Parliament.

But Ritz said the change in U.S. farm policy flagged by Obama was just one of several measures that would be required globally for the Doha round of trade talks to conclude successfully.

"It's one of the aspects. On the top 10 list, it's one of them," Ritz said.

Negotiations for a new world trade agreement have stumbled, partly due to an impasse on agriculture, with the U.S. farm bill seen by some as one key hurdle. Developing nations want the industrial world to cut farm support programs, while the United States wants developing nations to drop barriers to farm imports.

But Ottawa also expects Washington to be motivated by domestic pressures to ease spending on agriculture subsidies.

"They've got a farm bill that they know they can't afford. At the end of the day they're going to have to start ratcheting things down," Ritz said.

"Certainly they're looking at them on a case by case basis. As their ethanol industry spirals down, why would you be subsidizing a situation that isn't working?" he said.

(Reporting by Louise Egan, Editing by Peter Galloway)